Many Canadians lack adequate life insurance coverage, and industry leaders believe it’s up to financial advisors to do a better job of engaging these individuals and helping them with their insurance needs.
“Most Canadians would acknowledge that they need life insurance,” says Caron Czorny, vice president of business development with BMO Life Assurance Co. in Toronto and chairwoman of the Toronto-based Financial Advisors Association of Canada (a.k.a. Advocis). “They’re not sure which product to buy, and whether it’s the right price. I think it’s just a question of reaching them, finding them.”
Research conducted in 2013 by Windsor, Conn.-based global insurance association LIMRA International Inc. shows that even though a growing number of Canadians admit they need more life insurance, only 68% of households have life insurance, and many are relying only on group coverage.
A key part of the problem is that many advisors are focusing on the high net-worth segment of the market, or concentrating on investments rather than insurance. As a result, the average Canadian household’s life insurance needs remain unmet.
“I think the middle market is being overlooked, and young Canadians are overlooked,” says Jim Ruta, president of AdvisorCraft Media and Consulting in Toronto. “The industry needs to take control of this, and help people be more insured.”
To make inroads in new markets, advisors need to branch out from their regular prospecting routines and embrace new networking tools, Czorny says. To engage younger clients, she says, “They could be better connected on social media.”
Break down the process
Ruta admits that life insurance is not easy to sell. It is a complicated product, and a sensitive subject to raise with clients. By breaking down the process and focusing the conversation on the important role that insurance plays in protecting a client’s family, he says, the sale can be very straightforward.
“If we want to engage the uninsured or the underinsured in this business,” Ruta says, “I think we have to simplify the process.”
When approaching clients who don’t have life insurance, the key is to educate them on the dangers of not having coverage, and what that means for their family, says Sean Long, an insurance consultant based in Kitchener, Ont.
“It’s about teaching people about risk,” Long says. “Instead of selling to clients, you should be educating clients.”
Although a growing proportion of insurance advisors offer mutual funds and other financial products alongside insurance, Ruta says, advisors could benefit from developing a specialization in life insurance. By focusing exclusively on this product category, he says, advisors can demonstrate a higher level of expertise and can make the process of buying insurance less intimidating for clients.
“You cannot be everything to everybody,” Ruta says. “When clients need specific help in a complicated area — and it really is complicated — they need specific advice.”
A different approach
A focused approach can be highly effective, agrees Helena Smeenk Pritchard, who provides life insurance sales coaching and training with Helena Smeenk Pritchard & Associates in London, Ont. Smeenk Pritchard has teamed up with Long to develop a four-day training program designed to help advisors learn strategies for selling insurance and getting referrals.
The process of selling insurance requires a very different approach compared with investment planning, she says, and it’s difficult for advisors to master both sides of the industry.
“When people get into the groove of selling money products,” Smeenk Pritchard says, “they forget any training on how to sell life insurance.”
Given the sensitive nature of life insurance, the topic needs to be addressed in a different manner than investment planning. Clients may be reluctant to discuss a subject that conjures up thoughts of difficult circumstances but, Long says, advisors can find ways of framing life insurance in a positive way.
For example, he suggests asking clients: “Would you like to have legacy insurance for your family? That means your name goes on forever.”
Advisors should seek out training and mentorship to learn insurance sales strategies, Long says. Although some industry firms still offer training programs for new agents, the decline of the career agency distribution model has coincided with a decline in advisor recruitment and training.
Much of the training and continuing education (CE) that agents receive is largely product-focused and fails to provide them with the soft skills they need to build trust with clients, Long says.
“They don’t teach any people skills anymore,” he says. “And agents do need that.”
This is the second article in a two-part series on the insurance gap.